Priceline the company: news, stocks, etc.

[WillTravel]

This is not a thread that is particularly useful for people who want to place a bid. However, it may be useful for people who want some indication of what type of company Priceline is.

I want to emphasize that I think placing Priceline bids for hotel rooms is a very safe activity. The only thing that can go wrong there generally, provided you bid carefully for the right location and dates, is that you might have second thoughts about a non-cancellable reservation. Similarly with flights and rental cars. (In a few cases your hotel room or car or flight might turn out to be unsatisfactory, but that can happen without Priceline too, and then it's a general customer service matter.)

That said, I like to know about the companies I do business with. Here's the press release about the latest 2003 Quarter 1 financial results:

Priceline.com Reports 1st Quarter 2003 Financial Results; Hotel Service Sets All-Time Records: http://www.hotel-online.com/News/2003_May_...1051889400.html

Please add information to this thread about anything related to Priceline's press releases, software, patents, business relationships, etc.

[thesqueegeekid]

Their repeat business numbers are still sitting around 65% and we can imagine the last round of bonus money helped their sales. Funny thing about PL, they have 'earned' their revenue from the minute our bids are accepted and they get to sit on the money until our actual reservation is complete before paying for it (which can be months away).

The other online companies like Expedia and the market leader Hotels.com (both now owned by the same parent) had really strong earnings released a couple days ago. I still can not believe how well Hotels.com is doing there ads are cheezy and even their website ... but they at least show you what you get and have the most easily recognizable/memorable name.

PL's own lowestfare.com will be interesting to watch over the next few quarters ... I think it has no chance.

[thereuare]

...they have 'earned' their revenue from the minute our bids are accepted and they get to sit on the money until our actual reservation is complete before paying for it (which can be months away).

I thought that the hotel is paid for by Priceline when your bid is accepted, and they don't actually hold any money, they simply transfer it from us to the hotel (it's a little more complicated than that, but essentially that's the net result).

[thesqueegeekid]

I know that this system has recently changed where before, hotels were not even paid for no-shows and the charge to PL's Corp. master card was only billed after the stay. The only thing that has changed now is that the hotel gets a fee for no-shows. PL still pays after the stay has been confirmed by the hotel and for that matter, the payment comes in a month later.

One of the added benefits to the hotels is that with their payment, they get a zone report which shows the relative PL activity for all the hotels in the zone. It is an incentive for hotels to sign up regardless of how they set their price and what inventory they offer (My cous. has a Holiday Inn that participates with PL).

[WillTravel]

Squeegee, are you saying that this zone report lists the total PL activity for the zone, or the PL activity per hotel? Is it confidential which hotels participate with Priceline (other than the fact that people post their bids obviously)?

Actually, I can envision perfectly legitimate corporate espionage where hotel rivals have people assigned to bid on Priceline in various zones to get an idea of what going rates are for various places. I have no idea if this happens - but I'd totally expect it - just like I sometimes see people wandering around supermarkets with a clipboard noting prices.

[thesqueegeekid]

You have to remember one thing .. that PL as great as it is to us, still represents only 1% of the total hotels booked online. I read an article which mentioned that in some cases, PL has helped the 'off the strip', or 'out of town' hotels as normal drive by 'traditional' customers never reached them. By setting the lowest price on PL, they have increased there business significantly (which still may be only 2-10% of 'online' bookings).

If only hotel revenue managers were that smart... In fact, not all pay that much attention to any one individual report. My cousin from the Holiday Inn, she has a 4* Hilton which accepts $30 (less than her price) so any bid pretty much ends up getting upgraded to the 4*. In the $35 - $40 range, there are two participating 3*'s that share the remaining few bids.

As the minimum bid for a 4* is set by Priceline's system at $40, that Hilton does really well in the zone essentially cannobolizing the bids because naturally, knowledgable people start off there.

As an individual owner, she feels the pinch of setting her price too low BUT the smart ones are area revenue managers of chains who see how even getting $20 a night keeps things moving, staff are employed and look at the 'marginal cost' of the night's stay (essentially nothing).

An example of this is .... I believe the corp. name is Mayfair properties in and around New Jersey which sets the prices of their Radissons effectively to win the majority of the bids (in Princeton, Holtsville, Saddle Brook ... their hotels have recently been acquired and renovated and this helps them fill all the empty rooms).

Prime which owns the Sheraton Meadowlands NJ, and is the franchisor of Amerisuites is a another perfect example as you can see, all area Amerisuites accept the same low of $33. When the Radisson started coming up again at $37, they dropped their price of the Sheraton to $36.

So the PL reports help but only so much.

Another interesting tid bit of info is that Marriott hotels and most others must do 3 'phone arounds' every day to all area hotels and find out the avg. rack room rate and occupancy. This list is than faxed to their head office for future pricing decisions.

If anyone has any other PL/hotel related info ... I would love to have it as I am trying to finish my thesis on the this very subject!!!

[thereuare]

I am trying to finish my thesis on the this very subject!!!

THAT wasn't the thesis?!?!

Really great info!!

[WillTravel]

Interesting, squeegee. I wonder if corporate rates have dropped due to Priceline - any data on that?

I posted an email exchange I had with Priceline customer service on the other board. I was trying to clarify their upgrade policy - which I sort of know, but I wanted to see what they would say. Anyway, I did not get a clear answer, either because they do not know or do not want to say.

I suspected after the emails that Priceline uses offshore developers in India to develop the software. It turns out that I appear to be right.

http://www.cfo.com/printarticle/0,5317,8943%7C,00.html

Working for the past four years with New Delhi-based HCL Technologies Inc., Priceline.com Inc. virtually bet its future on offshoring. Determined to cut capital costs, improve time to market, and ramp-up quickly to meet explosive growth, Priceline.com had, at one point, 166 HCL consultants working on projects across four continents, while 20 other consulting companies also did work for Priceline.com and 4 other affiliate companies, says CIO Ron Rose.

Given that "the business units were making 650 modifications to the Web site a month," recalls Rose, "keeping up with that velocity was very difficult." But offshoring worked

[WillTravel]

Here's a list of Priceline's patents: http://digitalenterprise.org/cases/priceline.html

Here's the Patent Office web site to look up these patents based on the numbers provided: http://www.uspto.gov/patft/

[thesqueegeekid]

Interesting info ... imagine having their call center in India ... why not, everyone should do it too. I wonder how they can still ensure the phone call quality in terms of connection and of course ... phone costs. These cheap calling cards we see now-a-days have zero costs as they use the internet .. hence, all the echos, and bad connections.

I read your post on the other board and was trying to find an article I read once to respond to it ... I had google searched Priceline + secret + ???? ... and the article discussed how priceline actually chooses the hotel after the bid has come in, the margin required and than if not met, a secondary search at a smaller margin. If I find it again, I will post it (but I have to remember the actual search terms I used before).

As to whether PL has affected Corporate bookings .... not a chance. In fact, PL would be much more successful if it were allowed to reveal how cheap their hotel rooms really are. If you look at ads online ... it says "so and so saved this much %" or "recently booked prices 3* NYC $115" ... they inflate the prices for two reasons ... one is to get people to bid higher and second, they are NOT ALLOWED to reveal their prices at all. In their agreements with every partner, they can not make attempts to steal away those that would have booked paying higher amounts. They can essentially only compete with other online discounters.

They would kick A$$ by revealing the real deals like 3* Hyatt Regency Miami $27 ... This is going to be their downfall as how can they market their competitive advantage.

My opinion is ... you and I would tell that many more people if we were rewarded for doing so. They must set up a referral bonus ... even something small like bonus money.

PL/HK has just offered 2 free movie tickets if you refer 6 people ... now that is too low BUT something worthwhile. They are known for their word-of-mouth advertising but they need to speed things up a little or a lot because Expedia, Hotels.com and Travelocity are making huge gains.

Hmmmmm the new company started by the hotel majors ... the name escapes me (travelweb.com I think) will also have a major impact once they start their campaign.

As easily as PL is getting these deals from hotels, they can be taken away finishing up PL forever.

[WillTravel]

Priceline Hong Kong (which is owned in part by Priceline.com) has somewhat more realistic amounts on its web site. For example - it had 500 $HKD for a hotel room in Bloomsbury-Marble Arch (sorry I can't find the reference now and although I think it was a 4*, I'm not 100% sure).

500 $HKD is about $64US - I doubt that Priceline.com has advertised you can get 4* hotel rooms in London for $64 US (although you often can). I'm sorry for the lack of documentation here - I'm just going by memory.

Re the call centers in India - it's a huge industry with numerous corporations from Lufthansa to GE having call center agents there. The agents are given lessons in how to sound American and they get to choose Anglo-sounding names (obviously America is not entirely Anglo, by far, but I guess they think this helps further the illusion). They keep up with cultural references by watching Friends. Read more here: http://www.nytimes.com/2001/03/21/technolo...9bfc4f9&ei=5070

[thesqueegeekid]

PL/UK/HK ... are exceptional. I mean look at the bonus money offered by UK 10 pounds or about $15.9 US off per night. I have a friend in the UK who booked 3 nights in Chicago at the Oakbrook Hilton Garden Inn for a 5 pound bid ... total per night for three nights in US$ .... $12.50.

I paid $27 including taxes and fees on PL/US for the same three nights.

UK/HK/SG are trying very hard to build their business ... I still can't believe that PL was able to attract hotels overseas to offer low prices. The hotel industry blows my mind.

The most fascinating of all is the posters on flyertalk who are paying $100's per night and relish their elite points ... BUT in their case, some company is paying and they get to blow all their points themselves. PL also can not work for the business travel as has been pointed out a million times over there.

[thereuare]

PL would be much more successful if it were allowed to reveal how cheap their hotel rooms really are

You have to realize that Priceline's business walks a very fine line and they are caught in the middle....

they'd like to advertise better to gain more business, but if they revealed prices then no hotels would participate = Catch-22

[thesqueegeekid]

they'd like to advertise better to gain more business, but if they revealed prices then no hotels would participate = Catch-22

You are totall right theure, let also me add that ... catch-22 = failing proposition

People will not bid let alone register until they know a reason too ....

Hotwire smartened up in their system upgrade by allowing you to get prices without being registered. Before, you were stopped by the sign-in screen which scared off many users.

BUT if we had the solution for PL we'd .... well, I'd be sitting there in Norwalk, CT in the head office making some cushy coin... (Got to keep digging).

Another major flaw with PL is what happens after a customer gets an accepted offer and the emotions they have through.

First they click on the hotel website link which is frustrating because PL only links you to the main Hotel chain website. Second, they check everywhere and anywhere else to see if they indeed got a good deal. We have all done this and can relate (of course before discovering the message boards).

This is technically called "cognitive dissonance" where one re-assures themselves in a post-purchase situation. With PL ... they have not made this any better/easier with the hotel link, or even showing immediate prices from other sources to make the customer feel GREAT. Hence, the low 65% repeat customer rate.

[WillTravel]

Squeegee, is your thesis strictly about Priceline and hotel rooms, or are you considering other products as well?

The main reason I have a hard time wholeheartedly recommending Priceline to everyone I know is because of the non-cancellable aspect. Maybe the best way to deal with this is to have a cancellable back up until the last minute, and then give Priceline a try. You might not get the best deal, but you would greatly reduce the chances of not knowing if you could use the reservation.

[thesqueegeekid]

OK here is a statistic that blew me away...

In all hotel rooms booked in the USA, the percentage of all guests that purchase pay-per-view adult movies is 40-50%. It took me a long time and much debate to see the reality in that number.

Now, if you factor in that 80% of hotel rooms are booked by business'men' than the statistic makes more sense. The hotels as a practice do not show 'adult movie' on invoices and of course, companies paying travel expenses foot the bill. Marriott has taken some heat from this from his community and in the press as the owner/founder is Mormom. BUT after revealing that they earns millions in additional revenue ... why would they give it up.

Omni is the only hotel company that has removed adult movies from all their hotels ... and I guess, there goes their 'business' customers over to the competition.

With all the news about company scandals and 'fraudulent' numbers ... I am surprised they have not cracked down even more on travel expenditures .... in the end, once hotels have to post an adult movie as an adult movie on the bill, the revenue will fall and perhaps Omni will have the last laugh.

[WillTravel]

The larger picture is that the hotel room price is far from being the only profit source for the hotel. There's the minibar, phone calls, business centers, hotel restaurants, gift shops, movies (of all sorts), etc. I'm curious how many hotels have VCRs - my perception is that the number is low, but I haven't really kept track. But the bill itemization and the fact that every non-room-price expense will show up would sure make Priceline a difficult sell for these businessmen.

So how many Priceline hotel rooms are sold to families vs. single travellers?

[thesqueegeekid]

It was originally about just PL (thesis) ... but now that I have concluded I have no solution, or PL is not ready to tinker with other ideas and all our customer suggestions serve deaf ears... I am now taking a more general look at the whole industry. This summer I will travel or spend 90 straight hotel nights in Chicago, Philly, Boston, DC, MD, NJ, CT .... stringing together facts (cheaper than rent too thanks to PL). Funny, I would have had a lot less to do to get a job if I had gone to B-school 3-5 years ago.

I have a strong background in restaurants so that is my 'cancelable back-up reservation' so to speak (LOL)!!!

I wonder if PL could loosen up a little on their "no refund" policy ... is that part of their agreement with the chains??? Especially when in every other aspect of our consumer lives, we are treated by better and better customer service. Wal-Mart .... return anything for any reason.

Also, if they can sneakingly offer their bonus money to boost earnings ... look at the stock today up 30%+ than they could at least sneakingly provide better customer service. They are making customers out to be idiots on every attempt to contact them or with their 'one time exception'.

There are a million examples we have all read ... the lady at check-in who is given a hard time getting her room. I mean, PL MUST have an immediate response for this problem. She will never use PL again and tell 29 other people not too either.

Willtravel, I see you are equally interested in hotel data and the hows and whys??

[WillTravel]

The no refund thing has a really cold feel to it. It's obvious why it's done and it's quite possible some people would take advantage of a refund system to determine lower prices. But it's what bothers me the most whenever I want to make a bid. But you can just imagine someone mistyping something (and who doesn't make typos) - hitting Submit too quickly and not perusing the Summary screen - and wham, a room for 10 days in the wrong month. How many other ways can you lose hundreds of dollars in a split-second by a single click of the mouse?

Even if it is possible to get a refund, most people are too intimidated by the thought of asking - after all Priceline says you can't.

Yes, I am interested in hotel data - but not just that - e-commerce models generally.

[thesqueegeekid]

The larger picture is that the hotel room price is far from being the only profit source for the hotel.

I would love to see the statistics on how many people buy the water bottles with the clearly marked price of "$too much$" ... but this is industry wide with the exception of Candlewood Suites and their 25 cent soft drinks, free movies or Baymont giving away free coffee and water to everyone. BUT if they are pricing everything for business travel, it make sense to 'milk the cow' some more. Hyatt's response in an article about their $4.25 bottles is that they offer free water to elites and the bottles are clearly price-marked ... essentially, a non-response.

Phone calls $$$$$

I imagine, we will see major changes in the next few years as with everything, competition and consumer awareness will set in.

[WillTravel]

I recall as a business traveler there is zero incentive (other than feeling guilty) to save the company money. If you have a per diem for meals, what is the advantage in not spending every last cent? Possibly some one cares, but most people see little evidence of it. If you are allowed a set amount for a hotel stay, again there's no advantage in taking a cheaper option.

I can correct my post above - the Priceline HK site gives the following examples of the prices you can get:

Priceline Hotel Price Examples in the UK

So when I said a 4* hotel in London above, I should have said 3*. Still, a 3* hotel at a bid price of $64US is not wildly off-target at all.

Go to xe.com or oanda.com for exchange rates.

[chpcruzr]

Lots of interesting topics in this thread, could be four or five threads here easily. In regards to waste in business travel I agree completely and this is one reason I like to use Priceline for booking travel for my employees. With Priceline I can book all of the costs ahead of time (Hotel, Airfare, Rental car, etc) and know that they will not change. I don't have to worry about huge hotel bills including minibar purchases and pay-per-view movies because they are not lumped in with the hotel bill. I try not to pinch pennies much on meals and other such things (obviously very few people want to leave their family and go on business trips so there has to be some incentive) but this is a huge benefit in eliminating redicuous expenses that people wouln't pay for if it were their dime.

I once asked an employee to find travel arrangements for a two week business trip. He found a normal airfare (fully refundable, full price), a very nice hotel (again at full rate), a full-size rental car (again full rate), etc. I was fine with the price but then I told him if he'd like I would just give him the money and he could make his own arrangements. He took me up and he drove himself there, stayed in an enconomy hotel he booked on priceline, didn't rent a car (he drove), and spent less than a quarter the money. How much money do businesses lose because people don't realize that when they waste it now, it doesn't show up in their paycheck later?

[chpcruzr]

If Priceline could even advertise that everyone gets one free cancellation (First time trying Priceline if you don't like what you get just cancel it, no hassle & no charge), imagine how many more people would feel comfortable enough to try Priceline once and then get hooked by the low rate they get. Or if instead of sending bonus money offers they occasionally sent out worry free "bid retraction" offers. Even if Priceline still had to pay the hotel I think they would make up for their loss in increased business.

One thing I have to wonder about though, how large can Priceline grow before they do become a threat to convential hotel business and the hotels start to cut them off?

[WillTravel]

I can see that being able to cancel your first booking might be an incentive, for sure.

I don't know if Priceline.com is doing anything like these customer testimonials on the Priceline HK site. I thought they were quite charming.

http://www.priceline.com.hk/eng/ourcompany...12364e8e1022014

Cbpcruzr, very nice thing you did for your employee. I hope he appreciates it too! I think the reason people see no incentive to save when they are doing business travel relates back to the whole issue of company loyalty. Employees may see little incentive to save money if they feel they are subject to layoff at any moment, for example.

[WillTravel]

There are numerous tales of woe on the other board about people who were unable to get rooms with 2 beds. People who are informed about the areas they are bidding in probably won't run into problems, or have a backup plan if they do. But that's not going to be true for all travellers.

On the one hand, you could say that it's their fault, since they should have read the Priceline legalese and they deserve it. On the other hand, few people ever do that realistically - they just assume this will be like a normal hotel purchase. Priceline certainly does not play up the fact that people may be stranded in a 1-double-bed room that is 8x12 or something ridiculous.